David Dollar, Country Director for China and Mongolia, World Bank; Shang-Jin Wei, Assistant Director and Chief of Trade and Investment Division, Research Department, International Monetary Fund and Research Associate and Director of the Working Group on the Chinese Economy at the NBER. The authors wish to thank Jahangir Aziz, Chong-en Bai, Marcos Chamon, Chang-Tai Hsieh, Cui Li, Anil Kashyap, Yingyi Qian, Raghu Rajan, and seminar/conference participants at the NBER and IMF, especially Francesco Givanzzi, Galina Hale, and Chang-Tai Hsieh for helpful comments, and Yuanyuan Chen, Chang Hong, Xuepeng Liu, and Eric von Uexkull for excellent research assistance. This paper represents the personal views of the authors, and not necessarily those of the World Bank, the IMF, the NBER, or any other organizations that the authors are affiliated with.